 Can Intangible Investments Ease Declining Rates of Return on Capital in Japan?Tsutomu Miyagawa (), Miho Takizawa () and Konomi Tonogi () International Productivity Monitor, 2017, vol. 33, 114-127 Abstract: Japan's economic growth has slowed since the collapse of the bubble economy in the 1990s due to low capital accumulation. We focus on the low rate of return on capital, which led to this slow capital accumulation, finding that it was caused by an increase in the capital-output ratio and low capital share. Not only has the rate of return on capital declined, but its variance across industries has increased, as has the number of industries with negative rates of return. We estimate a profit function in which the profit rate is explained not only by the real wage but also by intangibles. The estimation results show that investment in human resources increases the profit rate and that intangibles contribute to this increase through productivity improvement, especially in the IT industry. Our study implies that governments should implement a comprehensive innovation policy that stimulates investments not only in R&D, but also in IT and human resources. Keywords: Intangible Capital; Profit Function; Investment; Productivity. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sls:ipmsls:v:33:y:2017:6 Ordering information: This journal article can be ordered from Access Statistics for this article International Productivity Monitor is currently edited by Andrew Sharpe, Executive Director More articles in International Productivity Monitor from Centre for the Study of Living Standards 170 Laurier Ave. W, Suite 604, Ottawa, ON K1P 5V5. Contact information at EDIRC. |
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